Still don’t understand how tariffs work? Here’s an easy way to understand Trump’s taxes on imported goods

In a few days’ time, new tariffs are due to come into effect for goods imported into the U.S., as President Donald Trump doubles down on his aggressive policy of levies against overseas trade partners.

In an executive order issued on July 31, Trump said the tariffs are to come into effect on Thursday, August 7 - a week later than initially planned.

How much are the new tariffs?

Trump’s order says a new tariff floor of 15% will be applied to partners with which the U.S. has a trade deficit - countries or blocs that send more goods to America than it exports to them.

Numerous partners face tariffs higher than 15%, however. Notably, Syria’s will be 41%, while Laos and Myanmar’s have been set at 40%.

Brazil has been hit with the highest levy, at a massive 50% - but this is largely in retaliation for the South American country’s prosecution of its former president, Jair Bolsonaro, who is a right-wing Trump ally.

Brazilian products would otherwise have been taxed at 10%.

Ten percent will be the standard rate for partners with which the U.S. has a trade surplus - in other words, America sells more goods to them than they sell to America.

What about China?

A major absentee from Trump’s new list of tariffs is China, with whom the U.S. became embroiled in a trade war of tit-for-tat tariffs following the president’s return to the White House at the start of 2025.

Indeed, escalating tensions saw the U.S. up China’s tariff to 145%, with the Asian giant slapping a 125% tax on American imports. The nations then agreed a 90-day pause to those rates in May, and are currently negotiating what happens next.

Meanwhile, the U.S.’s tariff on Canadian goods has been raised to 35%, but this new tax has already come into effect. It was introduced on Friday, August 1.

How do tariffs work?

When a tariff is imposed, it is the importer of the product that pays the tax - not the exporter.

For example, if a U.S.-based retailer of electronic products wants to import foreign televisions that are subject to a 20% tariff, a $500 TV will cost the company $600 to bring to America. The additional $100 goes to the U.S. government as tax revenue.

What are tariffs for?

As Investopedia’s financial expert Scott Nevil explains, raising tax revenues is a major reason why governments introduce import tariffs.

Indeed, the U.S. Treasury says it collected over $26 billion in tariffs in June. And ahead of the latest round of tariffs, Trump declared to NBC News: “We will be taking in hundreds of billions of dollars, and very quickly.”

Trump’s policy of tariffs is also about encouraging domestic manufacturing over the purchase of items made abroad.

Given that companies selling imported goods tend to pass the extra costs of tariffs on to their customers, these levies can make products from overseas become less attractive to U.S. shoppers.

“A key point to understand is that a tariff affects the exporting country because consumers in the country that imposed the tariff might shy away from imports due to the price increase,” Nevil says.

It’s also possible that importers will seek to funnel the additional expense of tariffs back to the exporter, by negotiating lower prices on the products they buy. For example, U.S. retail giant Target reportedly asked Chinese suppliers to absorb chunks of Trump’s levies.

Trump’s administration points to tariffs’ impact on foreign exporters as the price to pay for access to a highly sought-after market.

The U.S. boasts “the world’s biggest and best consumer market,” White House spokesman Kush Desai declared in a statement to CBS MoneyWatch.

The gummy-bear tariffs analogy

For a different way of explaining tariffs, let us point you in the direction of this video by CNN’s Anna Cooban. Cooban has come up with an analogy that involves a kindergarten, gummy bears, and playground equipment:

U.S. consumers should expect increasing price hikes

As President Trump continues to hit trading partners with tariffs, economists are warning U.S. consumers that they should brace themselves for steadily increasing prices in the coming months.

“Up to now there has been only limited passthrough from tariffs into final consumer prices, but we still expect the impact to gradually mount in the second half of this year,” said Paul Ashworth, chief North America economist with Capital Economics, per CBS.

In its most recent monthly statistics, the Bureau of Labor Statistics (BLS) reported an uptick in inflation in the U.S. in June, to 2.7%. This is the highest increase in the price of goods and services in America since February.

“It is the case that we’re now seeing lift-off in inflation in goods,” the economist Torsten Slok told Bloomberg after the release of the BLS’s report.

Speaking to NBC News on Thursday, however, Trump claimed: “The only price that’s spiked is the hundreds of billions of dollars coming in [in tariff revenues].”

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